Cooperative Offers Farmers Health Insurance

While many voters say the war in Iraq is the single-most important issue influencing their choice for president, other concerns like health care likely aren't too far behind.

That's especially true for America's farmers and ranchers who, according to one study, spent about $7,250 per family on health insurance in 2006.

In a study of over 2,000 Midwestern farmers, researchers at Brandeis University in Boston found that one-in-four producers had financial problems due, in part, to the cost of health insurance.

The researchers say farm and ranch families tend to pay more because they often purchase insurance on the open market, rather than participating in a group plan provided by an employer.

But an innovative program in Wisconsin is helping producers capitalize on their numbers. Art Hackett reports on a cooperative effort to provide affordable health insurance for farmers.

James Mireau of Rice Lake is a rarity among the state's dairy farmers. Three years ago, he gave up the carpentry business and put his cousin's long inoperative dairy farm back into operation.

James Mireau, Rice Lake, Wisconsin "I grew up on a diary farm with my father and four other brothers and it was in my blood."

Even before he went into dairying, Mireau had been doing without health insurance.

James Mireau, Rice Lake, Wisconsin: "I let it go because I just couldn't afford it anymore at the time. It just kept on, it seems like at the time, about every 8 months, it was, price increases and I just couldn't keep up with it.

Building a new milk house took priority.

James Mireau, Rice Lake, Wisconsin: "You got hurt you just didn't go to the doctor. And the thought of something bad really happening or laying you up or losing the place over not having insurance was terrible."

At age 43, Mireau might not be considered a younger farmer but newcomers are a concern of Bill Oemichen of the Wisconsin Federation of Cooperatives.

Bill Oemichen, Wisconsin Federation of Cooperatives: "What concerned us is that the rates of uninsured tend to rise the younger the producer is. So our twenty and thirty-year old producers were covered at much lower rates than our older producers and this is the future of Wisconsin agriculture."

Cooperatives have played a role in American agriculture since the mid 1800s. Many dairy farmers ship their milk to a co-op. The idea is to gain bargaining clout by pooling milk or grain. Farmer-members own the co-op and share in the profits.

Co-ops also supply farm chemicals and fuel saving money by buying in bulk. Would that work for health insurance? Until recently, in Wisconsin and many other states, the answer was "no."

That was unfortunate for families like Jim and Connie March of Dodgeville, Wisconsin because health care was a major cost of doing business.

Jim March, Dodgeville, Wisconsin: "Our milk check, our milk income, is the majority of our income is the milk. You know, prices been up and down. It's up now but it's been down before. It gets a little tough to pay some of the bills sometime."

Unlike Jim Mireau, the Marchs had health insurance but it was a drain on their budget.

Connie March, Dodgeville, Wisconsin: "It was around $1,225 a month for three of us. And then we had each of the other kids. I think Travis was $100 a month to insure and Kim cost $125 a month to insure. So that was over $1,400."

Under Wisconsin law a co-op could buy insurance for its own employees. But the law didn't allow farmers or any other group of individuals to form a co-op for the sole purpose of buying health insurance. In 2003, after lobbying by the Federation of Co-ops, the legislature passed a bill creating health benefit purchasing cooperatives.

Jim Mireau, and Connie and Jim March, were among the first group of farmers to sign up for what is known as "Co-op Care" when it became available in April 2007.

Mireau has an individual policy costing about $90 a month. The March's policy covers them, a school age daughter, and their adult son, Travis, who works on the farm. Under the old plan, he had to buy a separate policy. They figure they save about $400 a month.

Art Hackett, Market to Market: "Had you been thinking about switching before this came up?"

Connie March, Dodgeville, Wisconsin: "Yes. It was getting so expensive and they weren't covering our children after the age of 19."

We went to Reedsburg, Wisconsin where the federation was conducting one of a second round of town meetings to sign-up new members.

Cathy Mahaffey, Co-op Care: "It's been really great to have this legislation that's really enabled folks to come together to purchase insurance."

Cathy Mahaffey is an insurance agent representing Co-op Care. The policies are underwritten by Aetna, a Connecticut based insurance company. Anyone in Wisconsin between the ages of 18 and 64 can join the co-op and purchase the insurance if they are farmers or own an agriculture related business.

Cathy Mahaffey, Co-op Care: "It's probably no surprise to you through the studies we've performed, as well as some that were preformed by the University of Wisconsin, there's been a significant issue with health coverage for agricultural producers."

Mahaffey is referring to a 2002 study by Agricultural Economists at the University of Wisconsin. That study indicates twenty percent of Wisconsin dairy farm families are completely uninsured. Four out of five state dairy families have no coverage for preventable care.

A U-W Extension study done that same year reported farmers who do have insurance pay three times as much for health coverage as salaried workers.

Cathy Mahaffey, Co-op Care: "We have decided, Farmer's Health Coop, that we are not going to reject anyone for insurance coverage. If you're eligible, remember that slide, if you 18 to 64, you are in farming, you live or work in Wisconsin, if you are eligible, you cannot be turned down for this insurance. We figure you can get turned down anywhere. "

And therein may lie the problem with Co-op Care. Groups which bring together people solely because they want to buy health insurance suffer from a principle known as adverse selection. Over time, the group shifts towards those with an above average risk of having high health care expenses.

Cathy Mahaffey, Co-op Care: "One of the problems with purchasing pools often is that people come in and come out. They join if it's a good deal for them and then, if there's a better deal down the street, then they leave. They join and then, if they have some health problems and they can't leave, well then they're stuck. Well we really can't have the in and out."

Part of the co-op care bargain is people have to sign-up for three years. They loose a substantial deposit if they drop out early. But so far, people are signing up. Oemichen says the federation's goal was a thousand people covered after six months. They passed that goal by nearly two fold.

Bill Oemichen, Wisconsin Federation of Cooperatives: "The demographics of the group look very good so we think that the pool will have a very long life. We, overall, are very pleased with where we're at today."

Art Hackett, Market to Market: "Was there any concern about doing something that's new like this?"

Jim March, Dodgeville, Wisconsin: "You wonder if you're jumping the gun. Yeah, that's always in the back of your mind. Do you take the risk or don't you?"

James Mireau, Rice Lake, Wisconsin: "But it's just nice knowing it's there 'cause all it takes is one heifer or cow just to have a moment and you just never know what could happen out here."

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